Emirates Steel cuts margin as loan oversubscribed - 19-Mar-2014 Abu Dubai Abu Dhabis Emirates Steel has cut around half the banks who applied to fund its $1.3 billion loan and dropped the margin by around a fifth after the facility was heavily oversubscribed, banking sources said on Tuesday. The loan, which refinances an existing $1.1 billion facility and raises cash to purchase assets from parent Abu Dhabis General Holding Corp. (Senaat), attracted commitments from lenders worth more than $5 billion, three of the sources said. This level of demand has allowed the borrower to reduce the margin it will pay on the loan from around 200 basis points over the London interbank offered rate (Libor) to around 160 basis points over the benchmark, the sources said, speaking on condition of anonymity as the information isnt public. Emirates Steel declined to comment. While the interest rate earned on the loan by banks will be topped up by fees, the fact Emirates Steel could drop the margin so significantly is a sign of both the quality of the borrower and the substantial liquidity in the Gulf loan market. The response was overwhelmingly good, especially from international banks, said one local banking source. A second banking source added the lower cost of their funding allowed the foreign banks to drive the price down. While the original deal still has more than three years to run, the company is hoping to take advantage of a lower interest rate environment to reduce its funding costs - a step it will achieve as the existing deal pays 250 basis points
Posted on: Wed, 19 Mar 2014 11:25:56 +0000
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